Party City reportedly target of $2B buyout offer

April 11, 2012|Reuters

A $2 billion takeover bid is being considered for party goods retailer Party City. (Handout)

Private equity firm Leonard Green & Partners LP is weighing a roughly $2 billion buyout of Party City Holdings Inc., North America's largest retailer of party goods such as balloons and Halloween costumes, according to people familiar with the matter.

Party City, co-owned by buyout firms Advent International Corp., Berkshire Partners LLC and Weston Presidio, has been exploring a sale after filing for an initial public offering a year ago that it may still pursue, the sources said.

Several private equity firms expressed interest in acquiring Party City but then dropped out, the sources said. Leonard Green is still in talks for a potential acquisition, and it is unclear who else remains in the process, they added.

Goldman Sachs Group and Deutsche Bank, who are part of the IPO underwriters, are also advising Party City on a potential sale, the sources said.

There is no guarantee the exploration will lead to a deal, and Party City could still opt for an IPO, the sources said.

Representatives for Party City, Leonard Green and Goldman Sachs declined to comment. Deutsche Bank was not immediately available for comment.

Party City's owners have asked for 10 times Party City's earnings before interest, tax, depreciation and amortization (EBITDA), valuing the company at more than $2 billion, said three of the sources. Staple financing was being made available at 6 times EBITDA, they added.

Berkshire Partners and Weston Presidio acquired the company in 2004, and Advent International invested in it four years later. The buyout firms together control 91 percent of the company.

Party City's revenues rose 58 percent, to roughly $1.6 billion in 2010 from 2006, while its adjusted EBITDA surged 85 percent, to $226 million in the period.

Party City sells party supplies, decorations and costumes for a variety of occasions and holidays, principally under the brands Party City, Halloween City, Factory Card & Party Outlet and Party Packagers.